Major currencies remain relatively rangebound this morning ahead of a key speech by Federal Reserve chairman Alan Greenspan today. In his semi annual testimony to Congress, the central banker is expected to present a balanced assessment of the economy but say that US interest rates will remain low for some time. "The market is anticipating that he will use the opportunity to stabilise the bond market by implying that US interest rates will stay at low levels for some considerable time," said Jenny Pollack, senior economist at AIB Treasury.
Niall Dunne at Ulster Bank said that Greenspan will try and dampen optimism, because if the market gets carried away with recovery hopes, "there is a real risk the bond market in the US will collapse, which would pressure the Fed to raise interest rates". Pollack added that while remaining cautious, Greenspan may also highlight the medium to long term prospects for the US economy which could provide support to the dollar. Data this week will provide some evidence of the potential strength of the recovery with the Philly Fed regional manufacturing index and the Michigan consumer sentiment index due for release. //www.bloomberg.com